Court Blocks Middletown’s Attempt to Avoid Affordable Housing Mandate

MIDDLETOWN, N.J. — A New Jersey town’s effort to avoid state-mandated affordable housing requirements has suffered a legal setback. On June 27, the New Jersey Superior Court upheld a lower court’s decision blocking Middletown Township from using eminent domain to seize a 52-acre property once home to a Circus Liquor Store.

The township had planned to redevelop the site for commercial and recreational use. But a developer’s lawsuit challenged that plan, citing the town’s failure to meet affordable housing obligations under state law.

Developer Files Builder’s Remedy Lawsuit

AAMHMT Property, LLC, purchased the site in 2023 and proposed a 937-unit residential development, including apartments, townhomes, and affordable housing. The company filed a “builder’s remedy” lawsuit, which allows developers to seek rezoning when municipalities fail to comply with affordable housing laws.

New Jersey's Mount Laurel doctrine requires towns to build their fair share of affordable housing and submit a compliance plan to the Fair Share Housing Center (FSHC). Middletown withdrew from this process in 2019, calling the requirements “unreasonable,” according to The Twin River Times.

FSHC attorney Ariela Rutbeck-Goldman argued the case before the court and said Middletown’s refusal to comply with the housing mandate left it vulnerable to lawsuits like AAMHMT’s.

Township Fights Back with Eminent Domain

After the lawsuit was filed, Middletown officials voted to condemn the property, labeling it as an "area in need of redevelopment." This designation would have allowed the township to seize the land for fair market value, if condemnation criteria were met.

But in July 2024, a court order barred the township from moving forward with that plan. The trial court ruled in favor of AAMHMT, finding that Middletown was “not constitutionally compliant” with its housing obligations and had failed to meet state requirements for affordable housing.

The court also cited a shortfall of at least 602 affordable housing units in Middletown. AAMHMT estimates the deficit is closer to 1,026 units. The Superior Court affirmed the ruling, preventing the township from using eminent domain as a workaround.

Pattern of Resistance

This is not the first time Middletown has faced legal action over housing. In 2023, Adoni Property Group sued the town after it blocked a proposed 474-unit development that included 71 affordable units. At the time, Middletown officials argued that a small number of affordable units in a luxury complex would not significantly impact the town’s housing stock.

Middletown Mayor Tony Perry has been a vocal critic of the Mount Laurel doctrine, telling the Asbury Park Press the town will take its case to the New Jersey Supreme Court to defend what he calls “the rights of municipalities” under the Constitution.

More Obligations Ahead

As of June 30, municipalities across the state were required to submit updated plans for meeting their fourth-round housing obligations. Middletown must add 346 affordable units between 2025 and 2035, on top of the existing shortfall. FSHC says the town has shown no signs of cooperating.

Legal experts warn that using eminent domain to dodge affordable housing requirements undermines property rights and the purpose of the Fifth Amendment. With Middletown standing firm and new obligations on the horizon, further legal battles appear likely.